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Wheat crops in the U.S. Great Plains are showing signs that production may plunge even more than the government forecast last week as hot weather and a lack of rain erode plant quality and force farmers to harvest early.
After a Russian drought led to a drop in global output in 2010, the prospect of smaller crops in the U.S., the world’s largest exporter, has sent wheat futures up 56 percent in the past year. Goldman Sachs Group Inc. on May 11 raised its price forecast, citing “persistent adverse weather” in many growing areas. Dry spells in Europe and excessive rain in the northern U.S. and Canada also fueled prices, boosting costs for food makers including General Mills Inc. (GIS) and Panera Bread Co.
Food shortages and price increases are also causing political unrest in other nations such as India, Bangladesh and Indonesia. This is a very serious situation, and if the major food producing nations of the world do not have another record harvest this year there is very likely going to be an incredibly serious global food crunch. According to the UN's Food and Agricultural Organization, the global price of food hit a new record high in December. The previous record high for food prices was in June 2008, and we all remember what happened during the summer of 2008. Massive food riots erupted in countries such as Cameroon, Haiti and Egypt. So with price shocks and food shortages already being reported all over the globe, will we see even worse global economic riots in 2011?
According to Forbes, corn is up 94% since June, soybeans are up 51% since June, and wheat is up 80% since June.
Global food shortages have forced emergency meetings at the U.N. Food and Agriculture Organization where they claim "urgent action" is needed. They point to extreme weather as the main contributing factor to the growing food shortages.